Document Type : Original Article

Authors

• Samaneh noraniazad ¹
• nadia mirzababazadeh ²

¹ Assistant professor of economics, faculty of management and economics, payame noor university, Tehran, Iran

² Assistant professor of economics faculty of management and economics, payame noor university, tehran, iran

Abstract

Implementing the general policies of Article 44 of the Constitution has legalized the control of monopolies and promoted competition and market regulation by supervisory bodies. This study examines the evolution of market power in Iran's automotive industry between 2002 and 2020, focusing on the pre-and post-regulatory periods. A frontier approach is employed to assess the extent of market power. Results indicate that before regulatory interventions, the industry exhibited significant market power, evidenced by a Lerner index of 0.695 and a market power index of 2.331. Import restrictions and a concentrated domestic market substantially contributed to cost inefficiencies and a hard multi-product oligopoly structure. After regulatory reforms, import penetration and concentration levels declined, leading to reductions in both cost inefficiency and market power (Lerner index: 0.733, market power index: 0.408). While regulatory measures, such as price caps, effectively reduced market power, they also resulted in increased production costs, suggesting suboptimal exploitation of economies of scale and scope.

Keywords

• Intensity Market power
• Import share
• Concentration
• Non-competitive behavior
• Market regulation

Main Subjects

• Economics